Washington Income Tax
Figure basis: Official Washington State Department of RevenueWashington levies no state income tax on wages, salaries, or ordinary income. Residents owe no income tax at the state level, though federal income tax, Social Security, and Medicare payroll taxes still apply. Some states without an income tax offset revenue through higher sales or property taxes, so this page links to those calculators to help you build a complete picture of Washington's overall tax environment. If you recently relocated to Washington or are comparing states, use the sales tax and property tax tools below alongside the federal income tax calculator to assess your full tax burden. This page is sourced from Washington State Department of Revenue and reflects current Washington tax law.
Washington has no state income tax. Washington state has no individual or corporate income tax. The Washington Department of Revenue confirms this directly. Instead, Washington levies a Business and Occupation (B&O) tax on the gross receipts of businesses, a retail sales tax, and a use tax. Individuals pay no state tax on wages or salaries. Washington does, however, tax long-term capital gains above an annual standard deduction ($278,000 for 2025) at 7 percent, so large investment gains can be taxed even though ordinary income is not.
Washington has no income tax
Washington state has no individual or corporate income tax. The Washington Department of Revenue confirms this directly. Instead, Washington levies a Business and Occupation (B&O) tax on the gross receipts of businesses, a retail sales tax, and a use tax. Individuals pay no state tax on wages or salaries. Washington does, however, tax long-term capital gains above an annual standard deduction ($278,000 for 2025) at 7 percent, so large investment gains can be taxed even though ordinary income is not. For residents, wages, salaries and investment income are not subject to state income tax in Washington.
What Washington's no-income-tax label leaves out
Washington's headline is simple: no state income tax on your paycheck. The nuance that trips people up is what "no income tax" leaves out. Since 2022, Washington has taxed long-term capital gains at 7 percent on amounts above an annual standard deduction, set at $278,000 for 2025 and indexed each year. The Legislature deliberately wrote it as an excise tax on the sale of assets rather than an income tax, and the State Supreme Court upheld that framing in 2023, so it sits alongside the state's no-income-tax status. If you sell stock, a business interest, or other investments at a large gain, that 7 percent can apply even though your wages never will.
For business owners, the tax to watch is not income tax at all but the Business and Occupation (B&O) tax. Because it falls on gross receipts rather than net profit, a low-margin or even loss-making business can still owe it. The Service and other activities rate also climbs from 1.5 percent to 2.1 percent as annual receipts grow, so scaling revenue quietly raises your rate.
The broader trade-off is structural. Washington swaps a paycheck income tax for a 6.5 percent state sales tax, often 8 to 10 percent once local add-ons are included, plus heavy excise taxes. For a high earner who rarely realizes large gains, that mix can be a bargain; for a lower-income household that spends most of what it earns, the sales-heavy system often costs more as a share of income.
Washington income tax: frequently asked questions
Does Washington have a state income tax?
No. Washington state has no individual or corporate income tax. The Washington Department of Revenue confirms this directly. Instead, Washington levies a Business and Occupation (B&O) tax on the gross receipts of businesses, a retail sales tax, and a use tax. Individuals pay no state tax on wages or salaries. Washington does, however, tax long-term capital gains above an annual standard deduction ($278,000 for 2025) at 7 percent, so large investment gains can be taxed even though ordinary income is not.
Do I need to file a Washington state income tax return?
Washington does not collect a personal income tax, so there is no state income tax return to file. You still need to file a federal return with the IRS.
Does Washington state have an income tax?
No. The Washington State Department of Revenue confirms that Washington state does not have an individual or corporate income tax. Residents pay no state tax on wages or salaries, and most pay no tax on investment income, though long-term capital gains above $278,000 (2025) are taxed at 7 percent. Washington instead relies on the retail sales tax, the Business and Occupation (B&O) tax on business gross receipts, property taxes, and various excise taxes.
What is the Washington B&O tax?
The Business and Occupation (B&O) tax is Washington's primary business tax, levied on the gross receipts of businesses rather than on net income or profit. It applies to businesses operating in Washington, not to individuals' personal wages or salaries. Rates vary by business classification, from 0.138 percent up to 2.1 percent of gross receipts (the Service and other activities rate reaches 2.1 percent for businesses with $5,000,000 or more in prior-year receipts).
Have Washington voters ever considered an income tax?
Yes. Washington voters rejected income tax initiatives in 2010 (Initiative 1098, which would have imposed a tax on high earners) and in 2019. Each time, voters declined to introduce an individual income tax. Washington's constitution has also been interpreted by courts to require uniform taxation, which has historically complicated income tax proposals.
What taxes do Washington residents pay instead of income tax?
Washington residents pay no state income tax, but they do pay the state retail sales tax (6.5 percent state rate, plus local additions that typically bring combined rates to 8 to 10 percent), local property taxes, and excise taxes on fuel, tobacco, alcohol, and other goods. Businesses also pay the B&O gross receipts tax.
Official sources
- Washington no income tax confirmation: Washington State Department of Revenue, as at Jun 12, 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 11 June 2026. See our methodology. General information, not financial or tax advice.